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AB InBev (BUD) Q3 Earnings Top Estimates on Robust Volume

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Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported third-quarter 2020 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. However, both earnings and sales declined on a year-over-year basis. The better-than-expected results demonstrated the company’s fundamental strength as well as continued resilience in the global beer category. Revenues benefited from strong volume growth and revenues per hectoliter (hl). However, higher cost of goods sold partly offset growth in the top line, which offset margins and the bottom line.

Driven by the pandemic, consumers are quickly shifting to in-home consumption occasions, which has led to growth in the e-commerce channel as well as finding new ways to connect with others. Consequently, the company is witnessing acceleration in the B2B platforms, e-commerce and digital marketing trends, which has been aiding growth in the past few months. These evolving trends led to beer volume growth of 2.6% in the third quarter despite the closure of the on-premise channels.

Overall, shares of the Zacks Rank #4 (Sell) company have declined 8.8% in the past three months compared with the industry’s fall of 4.3%.



Q3 Highlights

The company reported normalized earnings per share of 79 cents, reflecting a decline of 35.2% from $1.22 reported in the year-ago quarter. However, the bottom line beat the Zacks Consensus Estimate of 73 cents.

Underlying earnings per share (normalized EPS, excluding mark-to-market gains and losses related to the hedging of share-based payment programs, and the impact of hyperinflation) were 80 cents in third-quarter 2020, down 14.9% from 94 cents earned in the year-ago quarter.

Revenues of $12,816 million declined 2.7% from the year-ago quarter but surpassed the Zacks Consensus Estimate of $11,638 million. It registered an organic revenue growth of 4% primarily due to a rise in volume sold and higher revenues per hl. Notably, revenues per hl were up 2.3%.

AnheuserBusch InBev SANV Price, Consensus and EPS Surprise


AnheuserBusch InBev SANV Price, Consensus and EPS Surprise

AnheuserBusch InBev SANV price-consensus-eps-surprise-chart | AnheuserBusch InBev SANV Quote

Total organic volume improved 1.9%, with a 2.6% increase in own-beer volume and a 2.5% decline in non-beer volume. The High End Company reported revenues growth of 6.5%, reflecting continued strength of the premiumization trend.

Consolidated revenues at its three global brands — Budweiser, Corona and Stella Artois — advanced 6.8% globally and 8.1% outside their respective home markets in the third quarter.

The cost of sales rose 2.3% to $5,256 million and was up 9.6% on an organic basis. However, organic cost of sales per hl increased 8.3% due to supply chain adjustments adapted to meet the evolving demand.

The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $4,892 million, which declined 7.5% year over year and 0.8% on an organic basis. Normalized EBITDA margin contracted 200 basis points (bps) to 38.2% and declined 188 bps organically.

3 Better-Ranked Beverage Stocks

The Boston Beer Company, Inc. (SAM - Free Report) delivered an earnings surprise of 23.1%, on average, in the trailing four quarters. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

National Beverage Corp. (FIZZ - Free Report) delivered an earnings surprise of 26.6%, on average, in the trailing four quarters. It currently flaunts a Zacks Rank #1.

Brown-Forman Corporation (BF.B - Free Report) currently has a Zacks Rank #2 (Buy). It delivered an earnings beat of 8.2%, on average, in the trailing four quarters.

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